Sam Allardyce will remain as West Ham manager but will have to produce "more entertainment" on the field, the club announced on Tuesday.
Allardyce and the West Ham board have held lengthy discussions and it was also made clear to the Hammers boss that his team must aim for "at least a top-10 finish" in the Barclays Premier League next season.
A statement released by the club said: "After listening to feedback from supporters, the board have insisted on improvements to the set-up of the playing and backroom staff to ensure the team provides more entertainment next season."
Allardyce has also agreed to recruit a new attacking coach to help the team adopt a more positive style of play.
The board will also have more influence on how the club spends "considerable funds" in the transfer market this summer.
Joint-chairmen David Sullivan and David Gold said: "We have a very clear vision of how we want West Ham United to operate under our joint ownership.
"Although not everybody understands the West Ham Way, we do and we respect it as we have been supporters all our lives. We believe this is about a philosophy that is not just about the style of play, but the whole ethos that surrounds the club.
"Sam was asked to give us a detailed presentation on his vision for next season and during this he assured us that he can deliver that ethos to West Ham United and we have agreed to support him with the resources that he needs.
"We have mapped out a way forward with him that will ensure our much-deserving fans have more to cheer about next season."
Allardyce guided the club to promotion from the Championship at the first attempt in 2012 and secured a 10th-place finish in the team's first year back in the Premier League.
The Hammers struggled with injuries to key players last season, including club-record signing Andy Carroll, and were threatened by relegation for the majority of the campaign.
Three wins over rivals Tottenham and a 13th-place finish did little to appease disappointed supporters, who complained about the team's defensive style of play.
In March, the home fans at Upton Park booed at the final whistle even after the Hammers had beaten Hull 2-1, to which Allardyce responded by cupping his ears in disbelief.
The statement concluded: "We are absolutely committed to taking West Ham United to new heights and we want to see the club continue on an upward trajectory next season.
"The 2014/15 campaign is crucial to our future and we are confident that Sam has the passion, experience and determination to make sure it is a success."
Allardyce added: "I look forward to taking the club forward and improving the squad for next season to try and achieve the plans we have set out in our very productive meeting last week."